When you extend a lease that has less than 80 years to run, there is an additional fee to be paid to the landlord called a Marriage Fee. When a Lease is extended it adds value to the property; sometimes this can be a substantial amount. Under the 1993 Leasehold Reform Act, the landlord is entitled to half of the increase in the value of the property when a lease of less than 80 years is extended, this is called the Marriage value or Marriage fee, so-called because the value of the property plus a longer Lease (i.e. when Married together) exceed the combined value of the separate entities. When you extend a lease with a remaining term of 80 years or more no marriage fee is payable, so you should always look to extend a lease before it hits the 80 year mark for this reason.
If you do have a leasehold property it is important to check the time remaining on your lease and if it is getting close to 80 years, it is important to act promptly to preserve the value of your home.
Even if you are intending to sell soon, or putting off extending for other reasons, it is still important to extend as a flat with a lease length of close to 80 years or under will continue to lose value as the lease shortens.
A property with a lease of less than 80 years will be harder to sell. Many potential buyers will not wish to incur the costs and uncertainties associated with extending your lease and mortgage lenders are reluctant to fund properties with shorter leases, especially those with less than about 70 years unexpired.
If the lease has fallen below 80 years, it still makes sense to extend it sooner rather than later as the cost of the lease extension will increase over time.
Whether you live in your property or are a landlord, our offices are always on hand to offer help and advice of property matters, selling and letting; please do not hesitate to contact your nearest office.
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